Page 58 - Rich Dad Poor Dad for Teens: The Secrets about Money--That You Don't Learn in School!

We focus on the word “literacy” and not “financial literacy.” What
defines something to be an asset, or something to be a liability are not
words. In fact, if you really want to be confused, look up the words “asset”

and “liability” in the dictionary. I know the definition may sound good to a
trained accountant, but for the average person it makes no sense. But we
adults are often too proud to admit that something does not make sense.
As young boys, rich dad said, “What defines an asset is not words but
numbers. And if you cannot read the numbers, you cannot tell an asset from
a hole in the ground.”
“In accounting,” rich dad would say, "it's not the numbers, but what the

numbers are telling you. It's just like words. It's not the words, but the story
the words are telling you.
Many people read, but do not understand much. It's called reading
comprehension. And we all have different abilities when it comes to reading
comprehension. For example, I recently bought a new VCR. It came with
an instruction book that explained how to program the VCR. All I wanted

to do was record my favorite TV show on Friday night. I nearly went crazy
trying to read the manual. Nothing in my world is more complex than
learning how to program my VCR. I could read the words, but I understood
nothing. I get an “A” for recognizing the words. I get an “F” for
comprehension. And so it is with financial statements for most people.
“If you want to be rich, you've got to read and understand numbers.” If I
heard that once, I heard it a thousand times from my rich dad. And I also

heard, “The rich acquire assets and the poor and middle class acquire
liabilities.”
Here is how to tell the difference between an asset and a liability. Most
accountants and financial professionals do net agree with the definitions,
but these simple drawings were the start of strong financial foundations for
two young boys.

To teach pre?teen boys, rich dad kept everything simple, using as many
pictures as possible, as few words as possible, and no numbers for years.
“This is the Cash Flow pattern of an asset.”
+------------------------+
--------------->|Income |
| |-------------------------
| | Expense |

| +------------------------+